Nynex Fined $4.1 Million For a Year of Poor Service

By RAYMOND HERNANDEZ

Published: August 23, 1996

ALBANY, Aug. 22—
New York State's top utility regulators have ordered the Nynex Corporation to pay $4.1 million in rebates because of the telephone company's recent record of deteriorating customer service.

In a highly critical report, the state's Public Service Commission charged that the company had more 24-hour breakdowns, missed-repair appointments and other problems throughout the state from April through June of this year than during the same period last year.

The report comes more than a year after the state substantially deregulated Nynex in return for the company's commitment to freeze the telephone rates of its 7.4 million customers and improve its record of poor customer service.

The agreement, among other things, had stiffened the financial penalties that Nynex would face if it failed to meet a series of monthly performance goals that the commission established. The goals included reducing service breakdowns and customer complaints.

The report, released yesterday, criticized Nynex for allowing its service record to decline since the loosened regulations were enacted. It said that the commission would have fined Nynex $3.3 million in penalties between April and June 1995 if sanctions had been in place then, compared with the $4.1 million in penalties it has imposed for that same period this year.

But at the same time, the commission acknowledged that Nynex was ''paying significantly more attention to service'' goals it set under the deregulation agreement with the company.

Mark Marchand, a spokesman for Nynex, did not dispute the report's findings, and stressed that the company had every intention of meeting the goals outlined by the commission.

''They are probably the toughest service standards in the country,'' Mr. Marchand said. ''But we agreed to them. We will meet them. We share the public service commission's urgency on this issue.''

Mr. Marchand noted that the company had allotted an additional $110 million to the $1.4 billion it planned to spend on replacing telephone wires and other old or faulty equipment. He also said that Nynex was in the process of hiring 1,500 repairmen, customer representatives and other service-related workers.

The sanctions were the first taken against the company since the commission allowed the company to begin earning unregulated profits. That flexibility is highly important to Nynex as it attempts to to turn itself from a regional utility serving New York and New England into a global communications conglomerate.

The loosened regulations also helped propel New York to the forefront of the 20 states that have deregulated their local telephone monopolies in an effort to spur competition and keep rates down.

Still, the commission has the option of pulling the plug on the deal after seven years if it is dissatisfied with Nynex's performance. The report, however, did not say whether the commission had any plans to impose regulations on the company in the wake of the rising service problems.